Michael Bowman.
Michael Bowman is portfolio manager at Wickham Investment Counsel. His focus is on North American large caps & ETFs.
Top picks:
Trim Tabs Float Shrink ETF
Like the prices of any tradable good, the prices of stocks are driven by one thing, supply and demand. Stocks should perform best when the amount of the outstanding shares decrease. The ETF invests in companies that buy back their own stock. These companies must be profitable, measured by cash flow, and have a solid balance sheet. The ETF is equal weighted and it only buys companies that have reduced the float via free cash flow rather than debt.
Public Storage
The REIT invests in self service storage facilities. The company has strong brand recognition and offers an array of services that smaller firms cannot provide. There will be ongoing industry consolidation and PSA will be a leader. The company has modest debt and a large cash balance. Occupancy is just under 94 per cent. Their overseas operations are gaining strength with the improving European economies.
iShares S&P/TSX Global Base Metals ETF
Good economic numbers are coming out of China, and commodity sensitive stocks should now start to benefit. Improving prospects for the U.S. and European economies are also brightening the outlook for resource stocks.
Past Picks: September 21, 2012
Horizon North Logistics
Then: $7.81
Now: $6.94
Total return: -8.04 per cent
Valeant Pharmaceuticals
Then: $53.35
Now: $107.29
Total return: +101.11 per cent
PowerShares Dynamic Leisure & Entertainment ETF
Then: $23.04
Now: $30.42
Total return: +32.60 per cent
Total return average: +41.89 per cent
Market outlook:
For the first time since 2007, the advanced economies, including Japan, the U.S., and Europe, together are contributing more to growth than the emerging nations. That being said, Chinese momentum should continue after last week's reassuring data.
Fundamentally, U.S. stock valuations seem somewhat stretched here. Technically however, over the short term anyway, stock markets want to move higher. Our six formerly overbought indicators have been neutral now for the past two weeks. Bullishly, the markets did not pull back after those overbought readings occurred.
The Federal Reserve has never had to unwind a quantitative easing program before, so we really don't know the full impact a drawdown is stimulus measures may have on the capital markets.